Posts Tagged ‘Brooklyn home buyer’

Is Now A Good Time To Buy Your Brooklyn Home?

Monday, July 18th, 2022

Couple considering if now is the right time to buy a Brooklyn home.

Many wonder if now is a good time to buy a Brooklyn Home. The news reports tell us interest rates are rising, and homes are not selling in a flash as they have been.

There is a cooling down in the market. But, this may be the right time for you if you are in the market for a home.

But, first, you need to ask yourself a couple of questions.

  1. Are you comfortable with the monthly payment?
  2. How long do you plan to stay in the home?

The federal government told us they would increase the interest rate late last year to curb inflation. In June 2022, they raised the interest rates by three-quarters of a percentage point. The increase was the most significant rate increase in nearly 30 years.

Inflation occurs when prices increase and purchasing power decreases. The loss of purchasing power affects your cost of living, which will cause a decline in economic growth. To keep inflation within acceptable levels, the federal government manages the supply of money and credit.

Inflation management may create a recession, but not a housing crisis as we saw in 2008. If inflation can be appropriately managed, the federal government may be able to avoid a recession. Unfortunately, economists are not as optimistic in their outlook and predicted a recession, while the Treasury Secretary, Jane Yellen, states a recession is not a certainty. 

Regardless of the expert’s prediction, the best time to buy a home is when you need one. 

I recently heard an analogy that says, “Marry the house, but date the mortgage.”

The analogy simply means if you find a home that is perfect for you and checks all the boxes on your must-have list, don’t pass it up. It may be a long time before you find a similar home. The mortgage rates rise and fall. If you are comfortable with the monthly payment and plan to stay in the house for the long term, you can refinance your mortgage when the rates fall low enough for it to make financial sense.

In the current market, inventory is generally still low, although there are more houses on the market than there were a few months ago. To put it in perspective, the June 2022 Monthly Housing Market Trend Report by Realtor.com indicates in June 2022; inventory was down 53.2% compared to June 2019. 

Although the time it takes a home to sell has increased in some areas, you will find most areas are still selling quickly, with a national average of 32 days on the market. Reports say that 32% of homes under contract in June 2022 had an accepted offer within one week of hitting the market. Additionally, Redfin reported that the average sale-to-list price ratio was 102.2% in June 2022.  Although these figures are down from a year earlier, they are still impressive statistics.

In the New York – Newark – Jersey City, NY, NJ, PA metro area, the median list price was $700,000, representing a 9.4% year-over-year increase. 

Mortgage rates are higher but still not considered high by historical standards. This chart shows the change in interest rates from the 70s. The quick rise in interest rates has caused the market to be in chaos. Typically, interest rates do not increase this rapidly. Rate increases have affected a buyer’s purchasing power.

Home prices do not decline when interest rates climb. As a result, the cost of a home will not drastically drop, but the rate at which prices increase is slowing. As a result, sellers may expect longer sales times. Remember that before the pandemic, it was not unusual to take up to 3 months (not days) to sell a home.

Buyers who were waiting on the sidelines should evaluate their motivations to move. Owning a Brooklyn home is a way to build your wealth; check out this previous blog post to find out how. The rental market has also changed, which may still make purchasing a home desirable.

There are many benefits to owning a Brooklyn home that may outweigh the higher mortgage interest rates.

Some benefits include:

  1. Strengthening credit with a good mortgage payment history.
  2. A fixed monthly payment is not affected by a landlord’s annual rent increase.
  3. Build equity as you pay down your mortgage.

If you determine you are comfortable with the monthly payment at the current interest rate, you will need to ask yourself a few additional questions.

  1. Do you have enough emergency savings in case something happens to the home?
  2. Is your credit score in good standing?
  3. What is your maximum price range?

You will need to contact a lender to evaluate your financial situation and pre-qualify you for a mortgage. A lender’s pre-approval is essential to:

  1. Provide a seller proof that you can afford their home and not take it off the market only to find out you can not obtain a mortgage.
  2. Ensure you are looking in the proper price range.

Talk with your lender about refinancing possibilities when interest rates drop. Be sure you understand any restrictions on your loan that would prevent you from taking advantage of lower interest rates in the future. 

Conventional loans tend to have less restrictive rules on refinancing. However, government-backed mortgages such as FHA, USDA, and VA loans are slightly different. As you discuss the type of mortgage you qualify for with a lender, be sure you understand the refinance rules for each program.

It is important to note that you will be charged closing costs to refinance. However, you may find a no-closing-cost refinance loan, or you may be able to roll the closing costs into your new loan balance.

There are many considerations to refinancing that you should discuss with your lender if you think that will be a future strategy if you are planning to marry the house, but date the mortgage!

Although the media reports a change in the market, it doesn’t mean we are in a lousy market. The unprecedented market that we have been experiencing wasn’t going to last. It lasted far longer than anyone imagined. The current activity in the market is stable and better than some years before the pandemic.

If you are considering a Brooklyn home purchase, Contact me, Charles D’Alessandro, your Brooklyn Real Estate Agent with Fillmore Real Estate. As a Brooklyn real estate agent with over 30 years of experience, I help many home buyers understand the home buying process. Reach me by phone at (718) 253-9500 ext. 1901 or by email at [email protected]

Charles D'Allesandro

Who Would Want an FHA Loan to Buy a Brooklyn New York Home?

Thursday, January 13th, 2011

Some Brooklyn home buyers have an advantage that others don’t in today’s housing market.  They can qualify for an FHA loan.

Federal Housing Administration (FHA) loans help Brooklyn home buyers who would otherwise have trouble being approved for a mortgage.  You can qualify for a loan if you have less than perfect credit.  FHA loans are available even after bankruptcy and foreclosure, if you have maintained good credit for the following two to three years.

What are the requirements for FHA loans?

FHA loans have strict home appraisal guidelines.  The appraisal value helps determine the FHA mortgage limit.  Each state has its own rules regarding maximum loan limits.

What are the advantages to FHA loans?

One advantage of an FHA loan is lower down payment requirements.  You may qualify for a down payment as low as 3.5 percent of the purchase price of the property.  Additionally, most of your closing costs can be included in the loan, so you’ll have less out of pocket expenses.

An FHA loan can also be used to buy a house that needs improvements.  If you need cash to make the repairs, you can apply for a loan to cover the cost of the expected repairs.  The FHA also has energy efficient mortgages which include the costs of energy improvements.

What are the terms of FHA loans?

An FHA loan can take many forms: it may be a fixed-rate loan, an adjustable rate mortgage (ARM) or a reverse mortgage.

  • A fixed-rate mortgage has a set interest rate for a set amount of time.  Typically, it will be a 15 or 30-year loan.
  • An ARM has a variable interest rate for 15 to 30 years.
  • The reverse mortgage pays a set amount of money to the homeowner for the entire time they live in the home.

Whether you’d like to finance a Brooklyn home using an FHA loan or a non-FHA loan, I can help.  Give me a call today Charles D’Alessandro of Fillmore Real Estate at (718) 253-9600 ext 206 or email me at [email protected]